[Bo_Fox]

-Couldn't edit my post.. do I need like 10 or 20 posts under my belt to be able to do this?

Anyways, I wanted to add that the GPU market is already pretty much saturated with DX11 cards already in the hands of the owner.

Most people already have at least an HD 5770 or GTX 460-768. Even if somebody has an HD 4870 1GB or a GTX 260-216, that person is quite unlikely to buy an HD 7770 at $159 today, especially after looking at the specs (only 640 shaders, 128-bit bus, etc..).

It's a bit like the Nehalem (Core i7 900-series) owners not yet seeing any real reason to give Intel more business after 3 years of excellent relative performance to the current offerings.

AMD is not giving that much incentive, to be quite frank, regarding the price. The new cards might be out, but there isn't much business going on. HD 7770 is a tiny chip, about the same size as an HD 6670, so AMD should really capitalize on the maximum profitability. During the immediate 1-2 month period, selling 100,000 cards at $40 profit each for $4m total is better than selling 20,000 cards at $80 profit each for $1.6m total profit. AMD can certainly produce these tiny chips in droves. Why discourage the 80,000 buyers from buying an HD 7770, potentially encouraging them to buy an Nvidia product instead? $4m is 2.4m better than $1.6m, no matter how short or long the period is, or when it is, period.

[neliz]

Originally Posted by Bo_Fox

During the immediate 1-2 month period, selling 100,000 cards at $40 profit each for $4m total is better than selling 20,000 cards at $80 profit each for $1.6m total profit. AMD can certainly produce these tiny chips in droves. Why discourage the 80,000 buyers from buying an HD 7770, potentially encouraging them to buy an Nvidia product instead? $4m is 2.4m better than $1.6m, no matter how short or long the period is, or when it is, period.

This is, of course, pure speculation as you have no clue about AMD's production capacity, its order fulfillment rate and basically if AMD is actually "hurting" because of its price strategy.

So in theory yes, your idea is right, in Theory R600 had plenty of good design ideas. In theory nobody should still be buying FX5200 in this day and age, but just guess those theories are.
For all we know, AMD is selling out their CV chips with maximum profitability. (imho a much more believable theory )

[Arty]

Originally Posted by AnarchX

According to the chart a ~260mm² Barts XT is expensive as a full 360mm² GF114?

Obviously due to Nvidia's agreement with TSMC - price per functional chip as opposed to wafer based pricing.

In all honesty, I'm just kidding.

[UniversalTruth]

Originally Posted by neliz

This is, of course, pure speculation as you have no clue about AMD's production capacity, its order fulfillment rate and basically if AMD is actually "hurting" because of its price strategy.

So in theory yes, your idea is right...

Yes, his idea is definitely right.
But AMD is definitely hurting because of their price strategy, plus nvidia's price strategy. This price doesn't create demand, which on the other side would create a need to improve FINALLY that poor production capacity. This has a direct impact on all PC hardware related sales and you see all those reports about less and less interest in classic PC.
The things are related and maybe it's all intentionally done. Just to have an ever rising interest in mobile devices.

And the other thing. This high price on 7770s creates the illusion that 6870s' prices are fair when they are not so.

Originally Posted by Arty

Obviously due to Nvidia's agreement with TSMC - price per functional chip as opposed to wafer based pricing.

In all honesty, I'm just kidding.

Yeah, or maybe nvidia's yield is better.

[neliz]

Originally Posted by UniversalTruth

Yes, his idea is definitely right.

From an end-user perspective. End-users don't buy GPUs, they buy finished cards from AMD's partners.

Those partners will have a hard time buying a Barts XT GPU because they're probably end-of-sale. Now the answer to this question (And death sentence for this theory) is just ask any AIB if they can buy all the 7xxx series GPUs they want (because the prices are so high nobody is buying them )

[leoneazzurro]

I don't understand well the chart, but it could be seen in two ways.

First, Barts GPU cost $35-$50 to AMD (Like a GF114 cost to Nvidia)

Second (and more probable) they both cost $35-$50 to AIBs.

In the first case, AMD's costs for mm^2 are worse than Nvidia. Possible? Yes. Probable? I don't think so, not in the 35-40% range.

In the second case, AMD's profitability of Barts vs. GF114 is better than Nvidia, and being the performance/mm^2 of Barts quite high, I'm quite inclined to think that the second possibility is the right one.

[no-X]

leoneazzurro: It's not AMD's manufacturing price, but selling price. It should be a chart od AiBs mises (I'm not saying it's correct, of course).

[Psycho]

it's most certainly not, as it's equipping a 6850 with the same VRM and cooler as a 6970...

[gkar1]

Originally Posted by Psycho

it's most certainly not, as it's equipping a 6850 with the same VRM and cooler as a 6970...

Forgot to mention the source is the Mercury Research PC Graphics report for the 3rd quarter 2011.

[caveman-jim]

People still believe cost + margin = price?

[neliz]

Originally Posted by caveman-jim

People still believe cost + margin = price?

Yes, the magic fairy just drops these cards off at newegg

[Silent_Buddha]

Originally Posted by Bo_Fox

During the immediate 1-2 month period, selling 100,000 cards at $40 profit each for $4m total is better than selling 20,000 cards at $80 profit each for $1.6m total profit. AMD can certainly produce these tiny chips in droves. Why discourage the 80,000 buyers from buying an HD 7770, potentially encouraging them to buy an Nvidia product instead? $4m is 2.4m better than $1.6m, no matter how short or long the period is, or when it is, period.

Using the same fictitious numbers.

What if AMD is only able to produce 30,000 chips for cards? Selling for 40 USD less means they'd lose out on a ton of money.

As a business you never want to price something such that it is always sold out. Any missed sale due to product being sold out is potentially forever lost if they instead go for a competing product.

The ideal price for a product is just high enough that supply is slightly greater than demand. Of course, it's very difficult and almost impossible to hit that. But in general it's better to oversupply than undersupply.

Basically...

We have no clue what demand for the 77xx is.
We have no clue what the supply for the 77xx is.
We have no clue how much it costs to manufacture.
We have no clue how much margin there is for AMD.
We have no clue how much margin there is for the AIBs.
We have no clue how much margin there is for the retailer.

When 77xx starts showing up on the Steam survey we may start to get an idea of how many cards are selling, but we still won't know if demand is just a tiny bit lower than supply or a lot lower than supply.

Occasionally you can find out the demand vs supply issue when a company reports it in their financial statements (Nvidia taking a loss to write off inventory back when GTX 28x was competing with 48xx for example). But even that is generally fairly rare. And is often used to inflate the subsequent quarters as they sell off inventory write offs for lower than the cost to manufacture. But since the writeoff was in the previous quarter, then it's almost all margins after that.

Regards,
SB

[Ernestds]

Originally Posted by gkar1

Why does the RAM costs almost twice for AMD on the HD 69xx?

[Kaotik]

Originally Posted by Ernestds

Why does the RAM costs almost twice for AMD on the HD 69xx?

Faster rated chips, 2GB vs 1GB in most other cards?

[Zaphod]

Either AMD needs to fire the guy who does their HSF sourcing or Mercury Research needs to hire some better proof readers. No way the 560Ti thermal solution is less than that of a HD5/6450.

[Ernestds]

Originally Posted by Kaotik

Faster rated chips, 2GB vs 1GB in most other cards?

I see.

But the 256 bits vs 384 bits doesn't make a difference? Or AMD still has to use more chips because of 33% more RAM (compared to the GTX 580)?

[Kaotik]

You don't need more chips for 1024MB vs 2048MB, you need more dense chips, same for 1.5 vs 3GB ofc

[UniversalTruth]

Originally Posted by Silent_Buddha

...Any missed sale due to product being sold out is potentially forever lost if they instead go for a competing product.

The ideal price for a product is just high enough that supply is slightly greater than demand. Of course, it's very difficult and almost impossible to hit that. But in general it's better to oversupply than undersupply...

Any missed sale due to products being overpriced is as bad as the one mentioned by you.
It is interesting to observe some Juniper based 5770s still available for sale. That means their price is far from being the ideal one, and supply is significantly greater than demand. Now, AMD can rely on and use the TSMC 40 nm production capacity and they can flood the market with ultra cheap Junipers (for example at 70-90 $), thus creating nice turnover and possibly significant profit too.
Another thing is that some retailers are so weird that they prefer to keep some overpriced products as long as they can on their store shelves (thus gathering only dust) instead of to sell them immediately at reasonable prices.

[Entropy]

Originally Posted by neliz

This is, of course, pure speculation as you have no clue about AMD's production capacity, its order fulfillment rate and basically if AMD is actually "hurting" because of its price strategy.

Originally Posted by Silent_Buddha

The ideal price for a product is just high enough that supply is slightly greater than demand. Of course, it's very difficult and almost impossible to hit that. But in general it's better to oversupply than undersupply.

What both of you are saying is that AMD is likely setting their price so that demand doesn't outstrip supply. This may well be true.
However, this also means that AMD largely fails to capitalize on being months ahead of nVidia on the new process node. If your theory is right, AMD should be less than happy about the situation.

[Silent_Buddha]

Originally Posted by UniversalTruth

It is interesting to observe some Juniper based 5770s still available for sale. That means their price is far from being the ideal one, and supply is significantly greater than demand. Now, AMD can rely on and use the TSMC 40 nm production capacity and they can flood the market with ultra cheap Junipers (for example at 70-90 $), thus creating nice turnover and possibly significant profit too.

Erm, HD 5770 (going by Steam) is the second most owned video card (regardless of DX version) for people that game. Yet if I look at Newegg, or various other sites it's still available for sale. I'd say that demand for that was quite high. Is it too high now? Possibly, but read further...

Originally Posted by UniversalTruth

Another thing is that some retailers are so weird that they prefer to keep some overpriced products as long as they can on their store shelves (thus gathering only dust) instead of to sell them immediately at reasonable prices.

Most retailer's can't afford to sell product for negative margins. For many they consider it better to hold onto a product until it eventually sells. Warehouse space is cheap compared to display space in Brick and Mortar. There's always the chance it'll never sell and they'll eventually be forced to sell it at much much lower prices. But it isn't uncommon for a retailer to wait 4-5 years or more before doing that.

The other case they have for holding onto them long term is if they have a long term store replacement policy. They can hope that a customer requires a replacement at which time they can swap the cards for the customer and then attempt to get reimbursement from the company that made the card, often for more money than they could have gotten by selling it at a discount.

Either way, you'll see many stores that still sell Geforce 3/4 cards. And anything from then til now. It doesn't say anything about AMD or Nvidia's demand/supply situation with regards to those cards as they no longer manufacture chips for them.

I'm sure if I went looking I could probably still find someplace selling G92 based cards. Does that mean it was horribly overpriced and unsuccessful? While I personally detest all the renaming that went on with that chip, I can't put blinders on and claim it wasn't a huge success at retail.

Originally Posted by Entropy

What both of you are saying is that AMD is likely setting their price so that demand doesn't outstrip supply. This may well be true.
However, this also means that AMD largely fails to capitalize on being months ahead of nVidia on the new process node. If your theory is right, AMD should be less than happy about the situation.

I'm not sure I follow? If AMD is making as many as they can on a new node (hence limited wafer allocation I'm assuming) then pricing it such that supply is just slightly higher than demand is the best course to follow.

Since we don't know AMD's production capacity, actual retailer inventory, actual retail sales numbers, etc., it is impossible to reliably come to the conclusion that you have. Just like it's impossible for me to definitively say that their stock levels are perfect with regards to demand.

Hence, there's no evidence that they aren't capitalizing on it. If product was constantly sold out then that would be clear evidence that they aren't capitalizing on the advantage. For example, they missed out on a huge opportunity to captilize on Radeon 58xx due to pricing. It was priced way to low and hence demand was far greater than supply leading to potentially huge loss of sales, not to mention money left on the table as people likely would have payed far more for it. Then again, coming from the 48xx - GTX 280/260 price wars, it's understandable that they priced conservatively.

That was fantastic for the consumers that could buy one. Not so much for AMD.

Regards,
SB

[neliz]

Originally Posted by Entropy

What both of you are saying is that AMD is likely setting their price so that demand doesn't outstrip supply. This may well be true.
However, this also means that AMD largely fails to capitalize on being months ahead of nVidia on the new process node. If your theory is right, AMD should be less than happy about the situation.

Then their failure to capitalize on their position (out of the gate first) is unrelated to product pricing.

loads of reasons for AMD to be unhappy. Pricing is NOT one of them.

[Entropy]

Originally Posted by neliz

Then their failure to capitalize on their position (out of the gate first) is unrelated to product pricing.

True. And yours and S_Bs position as far as I understand it is that the pricing is a consequence of being supply limited. (We can't tell if this is indeed the case, but it is an explanation which is consistent with what we observe).

What I pointed out was merely that if AMD is supply limited to an extent implied by the slow trickle of cards getting in stock and (even slower) getting sold, it is a lost opportunity to capitalize on being early out with working silicon at the 28nm node from a competitive point of view. With the current prices, people who are interested in the products are holding off, either because the prices simply are perceived as too high, or because they are unpalatable enough that consumers take a wait and see attitude. What they are waiting for is AMDs competitor, meaning AMD will loose market share in comparison to what they could have enjoyed. Neither AMD, nor their partners are likely to be happy about this.

If there are supply issues I wonder as to the cause. Have they booked too few wafers? (Would seem odd, but maybe TSMC are tightly constrained in terms of wafer starts). Do they have bad yields? (Possible of course, but it doesn't seem as if the current products are dangerously close to their operational limits).
So if we postulate supply constraints as the cause of current pricing, then there remains to explain just what causes the constraint.

[Albuquerque]

I'm having a hard time understanding the complaints regarding pricing.

They're the fastest.

There is no competition.

Therefore, expensive.

Don't like to pay it? What are you going to do, buy something slower? Maybe. Wait for something else that might be faster, or might be cheaper? Maybe. If you want the fastest, and you want it now, your option is to pay the money that they're asking.

We can empirically prove they're selling at that price, so it isn't even a question. When sales get "slow enough" to warrant a price reduction, it will happen. Until then, I fail to see any other relevant information regardless of source availability or some perception of "customer goodwill."

As a publicly traded company, they owe "you the customer" nothing -- they owe shareholders a big pile of ROI. If you feel that high prices will anger customers to the point of never coming back, that's fine and dandy, but their marketing team obviously disagrees.

[Bo_Fox]

It seems that there is another factor that was not yet discussed here..

While AMD sold those HD 5770's very nicely, making boatloads of $$ off these cards, AMD is pricing their super-small HD 7770's (a lower-end chip given the size comparable against HD 5670 and 6670) at the same bracket as they did with HD 5770s.

One of the biggest reasons:

AMD is feeling a bit threatened by Nvidia's upcoming Kepler. AMD so desperately does not want to encourage Nvidia to launch their products at low, super-competitive prices. Nvidia was rather aggressive with GTX 460-768 cards, snatching back the marketshare that AMD worked so hard to gain with early DX11 cards. The 460-768 was even cheaper than HD 5770, and performed better. This was one of the best deals of the decade, having a card nearly as fast as the previous generation $500 flagship (GTX 280/285) for roughly $100, sometimes even $85 with a rebate. Those $100 deals did come around often enough to entice buyers to do an impulse buy.

So, AMD is trying to set the bar higher, to encourage NV to not feel pressurized to do aggressive prices (concerning the rumors of a $300 GK104). The Graphics department of AMD is the main profit source, IIRC.. so AMD desperately needs $$ from that dept. I'd just call it a subtle, indirect form of "price fixing", that AMD is trying to get NV to coordinate with. If NV does coordinate, then it gives AMD some room to make aggressive cuts in order to try to spoil NV's launches!

Right, the HD 5870 should've been $500 instead of $400, the price difference alone would've made a huge difference in the number of buyers. The price could've changed the overall mindset (Bah, it's only 30% faster than GTX 285, and the DX11 games suck.. just wait for Fermi, etc..) Plus AMD was actually increasing the prices anyways, while able to meet the demand by the time of Fermi's launch. The marketshare gain, and the large sales/profit were what AMD needed anyways, plus the spirit of AMD thrived in the gaming community ("AMD is king" once again after so long since the X1900XTX). If AMD didn't do it at a "shiny" price, like launching 9700 Pro at $500 instead of $400, then the spirit would've had a much harder time radiating in the gaming community (as is the case with HD 7970 today).

[neliz]

In my neck of the woods the 460-768 spawned at ~€200 and never really dipped below €160.
Supply also stopped a good 2-to-4 months after the launch (Depending on the brand) so this gives you just the idea why this product was put on the market.

As far as I can tell this is stock clearance (who wants to sell 460s when there are 560s on the market?) and not a nvidia strategy.